More good news about fees and fee compression as plan sponsors and participants increasingly realize the long-term implications they have on retirement. Both large and small plans saw cheaper prices for investments and administration, regardless of the situation or scenario.
The average total plan cost for a small retirement plan (defined as 100 participants and $ 5million assets) declined from 1.24% to 1.23% over the past year, according to the latest edition of the 401k Averages Book.
It also found the average total plan cost for a large retirement plan (1,000 participants and $50 million in assets) declined from 0.93% to 0.91%.
Published since 1995, provides financial professionals with “401k cost information needed to determine if their 401(k) plan costs are above or below average.”
Other key findings in this year’s release, which marks the publication’s 20th, include:
Smaller plans pay higher fees than large plans
The small plan with $5 million in assets costs 1.23%, while the plan with $50 million in assets is 0.91%
Investment fees continue to decline
All scenarios (except three) saw a year over year decrease in total investment costs of between 0.01% and 0.03%. Larger plans led the way, experiencing greater decreases. These investment fees are typically paid by participants.
401k total plan costs declined for most size plans
:
Fully 22 of 24 scenarios saw a decrease in total plan costs from last year, while the other two remained unchanged.
Wide range between high and low-cost providers
The range of cost is greatest within the small plan market. The range of a plan with $1 million in assets and 100 participants ($10,000 average account balance) is 0.74% to 2.73%.
The trend continues from last year, which found the average total plan cost for a small retirement plan (100 participants/$5 million in assets) declined from 1.25 percent to 1.24 percent. The average total plan cost for a large retirement plan (1,000 participants/$50 million in assets) declined from 0.95 percent to 0.93 percent.